[New feature] Signals - Bitsgap Market Anomalies Tracker

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2019-03-05

For over a year Bitsgap has been providing services in trading, portfolio tracking, and arbitrage. During this time, our team has noticed many patterns and unusual market behaviours. We have collected a large amount of data and evaluated trading performance for each trading pair. With this information, we were able to create a brand new service which we call Market Anomalies.

Before we jump into what has been done, it is important to explain what market anomalies are and how they can be used as potentially profitable trading signal.

Market Anomalies

Let's start with what is considered as a market anomaly. A market anomaly is a temporary price action that negates the expected behaviour or trend of the crypto market. Most anomalies appear only once while others can be noticed consistently. Traders who can predict or join the market at the right time can use these unusual actions to take opportunities and make a great amount of profit.

If you could not predict the momentum effect it does not mean that you lost an opportunity to enter the trade. Quite the opposite, many coins experienced the momentum effect will likely continue the trend and move the price up or down. The momentum effect can be used for traders to take advantage of these price movements by opening a long position on winners and shorting the losers.

Most popular explanations for the momentum effect on cryptocurrency market is that the news do not immediately affect the market price. It can be delayed or the movement can be done in advance, before the official press release. The other scenario is breaking through the key levels of support and resistance which immediately trigger all stop losses or stop limit orders, and attract other traders to join the movement.

It is important to understand the nature of market anomalies directly, even if you do not intend to trade based on the completed price movement. This will allow you to adjust your trading strategy accordingly, so you are not caught unawares.

Reversals

Another historical evidence suggest that the crypto markets tend to reverse over the course of periods. It means that today's winner can become tomorrow's loser. And vice versa. In this case, the anomaly makes a perfect sense according to numerous technical indicators. If any of your coins is a current top performer on the crypto market, there are big chances that its price action has made it expensive for someone. Same goes for underperformers. If you see that the technical indicator for your favorite pair is over- or under- loaded, it would be common sense to expect that soon it will be unloaded, and as a result make a price movement either up or down.

It is a part of trading psychology that reversals work because people expect them to work. Cooperative trading based purely technical indicators will momentarily move the price in the direction where this particular coin is expected to be. This creates a so-called self-fulfilling anomaly.

Trade Signals

Now when we understand the market anomalies it is the time to understand how they can be used to bring profit for traders. The call to action from any market anomaly is delivered in the form of trading signal. This signal is a trigger for action which determines if you need to buy or sell particular coin.

Trade signals using a numerous inputs from several sources applied with the patterns seen before. It is based on analysis which can be generated by technical indicators, or mathematical algorithms based on price action. Or both combined. The main objective is to give traders a semi-automatic method to buy or sell cryptocurrency.

Risks

Market anomalies bring risks for traders due to its nature of not being predictable to where they start and end. It is unlikely that everyone can consistently profit from market anomalies, so you need to have a proper risk management strategies to save your money if the pattern will fail.

To do so, Bitsgap is providing Stop Loss & Take Profit order which can be used to secure your open position by closing trades when you are away and can't react quickly.

Bitsgap Signals - Market Anomalies Tracker

Today, we are excited to release our first version of Bitsgap Signals service. This service will allow you to monitor anomalies in real time and see the current state of anomalies we were able to detect in the past.

Starting from now, you are able to follow on any unusual market behaviour and join the movement with other traders. Our system automatically will detect any rapid price action and add it as an entry in Signals tab. From here, you can make a decision if you want to open a long position and take advantage on the price action. Or wait for a correction to proceed with price scalping.

All anomalies will be marked on the charts as well. So you always know where was the starting point of unusual price action. Here is an example of recent anomaly we have detected. The arrow shows where we convert this growth into anomaly and added to Signals.

Now imagine the opportunities you could get if you have open a trade at the moment we detect the anomaly. But remember to use Stop Loss & Take Profit orders to protect your funds and improve your risk management!